The Company You Keep: Why Health Plans Should Abandon Antagonistic Vendor Relationships

August 24, 2021 Michael Miller

A true partnership approach offers an alternative to the frequent change orders, upsells and IT headaches of the traditional point-solution vendor model.

When you think about the companies that help you operate your health plan, do you consider them partners or vendors? Trusted colleagues or disinterested counterparts? Someone who has your back or is working behind it? 

As in our personal lives, the company we keep in business has a profound impact on our success (or failure) and the quality (or lack thereof) inherent in our relationships. I often hear from health plans that feel they are stuck in relationships with their operational vendors that started out as promising, but are now cause for remorse, finger-pointing and hidden agendas.

Rather than acting like an extension of the plan, these vendors seem more motivated to upsell the plan on new services and features, or perhaps enhancements that should have been included as part of the initial agreement. Change orders are common, as seemingly simple IT updates spiral into expensive charges. In addition, they often do not "play well with others," leaving the health plan to keep an inefficient "Frankensystem" alive to maintain daily business operations. The plan is trapped, too dependent on the vendor but wishing it could abandon what has become a dysfunctional relationship.

Of course, vendors don't want unhappy health plans. The problem is that they work within a model that sometimes pits their interests against that of their clients. They want to make sure their solution is working as advertised. Anything beyond the scope is extra work—and an extra revenue opportunity for them.  

I firmly believe that health plans do best when they have true strategic partners, working side-by-side and arm-in-arm to help achieve collective success while offering an integrated system. In a sense, plans need a partner who is a protagonist—a champion and proponent of their cause. The partnership model fosters relationships built on transparency, accountability and trust. Without these characteristics, it is nearly impossible to easily reach your business goals.

Read on for several more reasons why plans should opt for the partnership model versus the vendor model.

Partners work proactively to avoid change orders.

Who among us hasn't been lured into an expensive investment—a home remodel, a new car—by a low base price, only to discover that it doesn't include what we really want or need? It can be the same way with the implementation of a core administration platform. Unless the requirements are spelled out in a highly deliberate way, plans may not realize that the final price tag is going to be much more. An "all-in" partner will meet extensively with a plan and work with it to prioritize its needs, under a financial arrangement that works for both parties. Change orders do happen on occasion, but they should be the exception, not the rule, and should never come as a surprise.

Partners get to know your health plan business as well as you do.

True partners work toward the same goal as your health plan, and they are accountable for results. When you succeed, they succeed, and vice versa. That is the very definition of a "win-win." It's squarely in a partner's interests to become the expert in your business. What is driving claims? How do we improve our auto-adjudication rates? Can calls be answered faster and handled more effectively? Is care truly being coordinated optimally for every member? A true partner will bring its resources to bear to help answer such questions. They are motivated to deliver high quality service and rewarded for helping your plan to meet its goals.

A partner takes away the headaches of vendor contracting.

Overseeing a host of point solutions in-house can require focus and expertise from already stretched staff members. Many plans have teams devoted to managing all their vendors and solutions. Make a change to one of the programs, and it ripples across them all, leading to a domino effect of costly upgrades. These different point solutions were executed at different times, and sometimes evergreen contracts are renewed without the plan even being aware. What else could you do with those resources if you could go from 15 vendors to collaborating with just one partner who does it all for you? Better yet, what if that partner already has an integrated platform you can tap into while continuing to leverage critical workstreams and existing investments? Further, what if that partner constantly keeps the myriad workstreams updated and in optimal working order? Offloading this headache—what we call "smartsourcing"—promises a true partnership approach.

Partners offer greater transparency.

Partnerships require trust, and trust demands transparency. A plan should have clear line of sight into how its partner is performing across different business operations, and it should have access to raw data from the partner's platform. Lack of such visibility can have unfavorable results, such as getting cherry-picked data from the vendor, and finding out too late that things have gone sideways in different areas of the business. It shouldn't be a struggle to find out how your plan is doing or to work with an accountable partner to find solutions. Evolent suggests to not only look behind the proverbial black curtain, but to get rid of it altogether.

I understand the allure of the vendor-buyer relationship. I have worked at numerous point solution firms. At first it feels clean, transactional and manageable. On paper, it can look potentially more cost-effective. But plans soon discover how tangled up they can get in cycles of change orders, upsells, contract renewals and a web of vendor interdependencies that drive up their administrative loss ratios and reduce operational efficiency. A wisely chosen operational partner, on the other hand, works to keep costs predictable while relieving plans of the role of integrator. With less stress and noise, the plan and partner can focus on delivering the best results for the plan and its members.


About the Author

Michael Miller

Michael Miller is chief sales officer with Evolent Health Services who has more than 27 years of experience in the health care industry. He is responsible for driving short- and long-term growth through business development, marketing, strategy and product innovation. Before joining Evolent, Michael held various leadership positions at GE Medical Systems, TriZetto/Cognizant and WebMD. He is a native of Denver, Colo., where he lives with his wife and three children.

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